21 August 2018 By Maria Thermann

Paris Property remains the second most desirable in Europe in 2018

According to a recent study conducted by estate agents Knight Frank International, which was based on the most desirable cities around the world, Paris's residential real estate market remains the most sought-after, at least for the super rich. The French capital saw a record price increase for residential properties last year, although Paris trailed behind London and ranked 12th in the world in terms of prices. However, investors are flocking back to Paris in increased numbers, despite the price hike.

The super rich (those with an income in excess of 24 million euros a year) include buyers from the US, Europe and the Middle East, who look to the most central parts of Paris for their investments, namely the 1st, 6th and 7th arrondissements. High prices and lack of available housing stock has driven an increased number of investors to the 10th district, an up-and-coming arrondissement in the process of being gentrified.

But there are signs that this price hike cannot last forever. According to the National Statistics Institute, in July 2018 fewer developers believed demand would continue at the same level for new properties as had been seen for the start of the year and during 2017. However, developers predict for the final quarter to come that demand will be slightly above long-term average, both for the rental sector as well as the first-time buyer segment of the market.

There are indicators though that fewer developers believe an increase in the average new housing price will occur, a slight drop from the end of April. Developers were, however, confident that financing capacity to buy new housing would go up over the final quarter of the year.

In the luxury sector, estate agents like Knight Frank are still enjoying a strong price growth year, following on from last year's successes. Knight Frank reported a 12% price increase in 2017 for Paris, when the French capital was the third best performer European-wide, according to Knight Frank's annual Prime International Residential Index (PIRI 100). PIRI 100 is based on the world's leading prime second home and city residential markets. For 2018, the estate agency's experts predict a 9% increase in prices for the luxury sector.

Price growth in all segments of the market is likely to continue, given Brexit and the fact that Paris is to host the 2024 Olympic Games.